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Further Reading

Brazil - Corruption

Corruption can be a challenge to investment in Brazil. In 2010, Brazil ranked 69th (among 178 countries) in Transparency International's Corruption Perception Index. In South America, Brazil ranked below Chile and Uruguay, and ranked above Colombia, Peru, Argentina and Venezuela. With regard to major emerging economies, Brazil ranked above India, China, Russia, Egypt, and Indonesia, and below South Africa and Turkey. In general terms, businesses find corruption a challenge in government procurement and at some levels of the judiciary.

Since the late 1970s, restoration or establishmentof democracy has produced stronger legislative bodies in many countries. Most notably in Latin America, newly-restored legislatures have taken a leading role in combating executive branch corruption. The most conspicuous example of this was the congressional impeachment of Brazilian President Fernando Collor de Mello, initiated by the Parliamentary Commission of Inquiry. More recently, the Brazilian Senate formed a special committee to investigate allegations that government officials had been involved in fraudulent sales of government bonds.

Corruption scandals are a regular feature of Brazilian political life. Corruption investigations, involving politicians from both opposition and government coalition parties, were conducted over the course of the last several years. In 2010, in two separate cases, the governor of the Federal District and the governor of the state of Amapa were arrested and placed in prison on corruption charges. In the Congress, ongoing public scandals involving the leadership of the Senate and various members of congress have led to low ratings for the institution among the Brazilian public. Increasingly, the court system has taken steps to curb impunity among public officials. These steps have been well received by a public accustomed to abuses by authorities.

On August 21, 2008, the Brazilian Federal Supreme Court issued a decision (Súmula Vinculante No. 13 de 21 de Agosto de 2008) prohibiting nepotism in the executive, legislative, and judicial branches of government. In 2005, the National Council of Justice (CNJ), a judicial agency responsible for the administrative and financial control of the judiciary and the supervision of judges, had prohibited nepotism in the judiciary (Resolução No. 7 de 18 de Outubro de 2005) and the prohibition was being considered by the Supreme Court, due to an action previously filed by the Brazilian Magistrates Association (Associação dos Magistrados Brasileiros) asking for acknowledgement of the constitutionality of CNJ's 2005 resolution.

After affirming the constitutionality of the resolution, the Supreme Court extended the prohibition to all three branches of the government, making the hiring of relatives who have not passed a public service entry exam a violation of the Constitution in the federal government, the state government, the Federal District, or the municipalities. This applies whether the person is hired directly by an administrative organ or by an independent organization that does government work.

In Brazil, fighting corruption at the local level in one particular community resulted in amanual for citizens that contains tips on and signs of corruption. They have continued to update the "Manual for Spotting and Fighting Corruption" building on experiences from other cities. Ten years later, the manual is still in demand around the world from NGOs, neighborhood associations, commercial associations, unions, regional category councils.

Brazil's anti-money laundering mechanisms and relatively independent prosecutorial and oversight institutions have played useful roles in the investigation of such cases. In June of 2010, the President signed into law Complementary Law 135, known as the “Ficha Limpa” law, which prohibits candidates convicted of crimes, including abuse of public office, from running for office. The Brazilian Supreme Court subsequently implemented the Ficha Limpa with respect to the 2010 federal, state, and local elections.

Brazil is a signatory to the Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention. Brazil has laws, regulations and penalties to combat corruption, but their effectiveness is inconsistent. Bribery is illegal, and a bribe by a local company to a foreign official is a criminal act. A company cannot deduct a bribe to a foreign official from its taxes. While federal government authorities generally investigate allegations of corruption, there are inconsistencies in the level of enforcement among individual states. Corruption remains problematic in business dealings with some parts of the Brazilian government, particularly on the local level. U.S. companies operating in Brazil continue to be subject to the U.S. Foreign Corrupt Practices Act.